Draft Public Procurement (Amendment etc.) (EU Exit) Regulations 2019

Jo Platt Excerpts

Wednesday 13th February 2019 General Committees

[Jo Platt (Leigh) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Sir Henry. I welcome this opportunity to discuss our procurement system and the proposed changes. I thank the Minister for his opening remarks. With just 44 days before our scheduled departure from the European Union, I only wish that this was not happening in such rushed and chaotic circumstances. However, that is what we have come to expect from this Government.

Before I comment on the statutory instrument before us, I must point out, as we in the Labour party have been doing for the last few years, that our procurement system is fundamentally broken. It is a system that works for big business at the expense of our small and medium-sized enterprises and, most importantly, the public. It rewards companies with poor employment practices that do not pay their fair share of tax and, in the cases of Carillion and Interserve, have flawed business models. The explanatory memorandum states that the purpose of these regulations is to transpose into law an “open and competitive” system in which

“suppliers are treated equally and fairly.”

I do not think that is possible without a fundamental shift in Government policy.

We know, for example, that under the current system SMEs receive a declining proportion of Government cloud spending. We also know that the number of businesses receiving late payments from the Cabinet Office has nearly tripled in the past two years, and that many large outsourcers simply do not pay their suppliers on time. Most importantly, a few mega-firms that are too cosy with Government continue to be dominant at the top. Although we accept and recognise that we need to address the statute book deficiencies that result from the UK exiting the EU, if the Government are serious about creating a procurement system that is truly open and fair, they must start at the root and overhaul this broken system.

[Martin Whitfield]

Is it not right that this statutory instrument yet again demonstrates the pressure that the incredibly hard-working civil servants are under to have everything in place for no-deal day? As was mentioned earlier, there are deficiencies that have been identified and not listed. An explanation for that has been given, but I feel that time pressure was probably more of a reason why those deficiencies were not listed. Given the drafting errors that this statutory instrument contains, the pressure pot is about to explode.

[Jo Platt]

I thank my hon. Friend for making that point, and share his concerns that this Government are not prepared for a no-deal exit from the EU. The fact is that the Government could stop this today by taking no deal off the table.

I will raise a number of specific issues with the Minister, on which I would like clarity. The first is the e-notification service that is proposed to replace the Official Journal of the European Union, in which tenders are currently published. We are told that the e-notification service will be ready by 29 March, so will the Minister confirm that that deadline will be met? Given this Government’s record on the delivery of technology, there is no reason for optimism. The gov.uk Verify programme, the national security vetting solution, the common platform programme, the digital services at the border project and the emergency services mobile communications programme are just a few flagship Government IT programmes; they have all been plagued by delays, spiralling costs or outright failure. To put it bluntly, this Government have consistently proven themselves incapable of introducing new technology across the public sector without causing significant disruption. Just this month, we have been discussing the Government’s failure to develop a EU citizen registration programme that works on both Android and Apple phones, so why should we have any confidence that they will deliver on this technological aspect of EU exit?

That e-notification service is particularly important because of the consequences of the system not being fully operational on exit day. The UK awards the most procurement contracts by value of any EU nation. Should that system be non-functional or error-prone as a result of the chaotic circumstances in which it has been created, the economic consequences could be dramatic, and the challenges to the public sector of maintaining procurement could be significant. That is the primary reason why we on the Opposition Benches are perplexed that no impact assessment has been carried out. We are especially concerned about SMEs, which often lack the access to technical expertise that large companies enjoy. If there are problems with the e-notification service, the impacts of those problems will be felt unevenly, and the Government will be further baking into the system the imbalances that already exist in our procurement market.

Turning to the Competition and Markets Authority and its oversight role in enforcing state aid rules, which is noted in the SI, will the Minister please update us on the CMA’s preparedness for exit day and whether it has the staff and resourcing that it needs? As my hon. Friend the Member for East Lothian pointed out earlier, as we know from extensive reporting in the media, the civil service is facing a challenge of historic proportions as it scrambles to prepare for both a no-deal Brexit and a transition Brexit. As the head of Her Majesty’s Revenue and Customs, Jon Thompson, recently said, the civil service is “hamstrung” by this lack of clarity. The Labour party has said that the civil service is incapable of fulfilling its role because of nearly a decade of public sector cuts.

These truly are trying times to be a public servant, and it is in this climate that the Competition and Markets Authority will attempt to enforce a state aid regime the nature of which we do not yet know, and in which the CMA has no experience. In other words, we do not know yet how a significant feature of the procurement market will work.

I seek clarification from the Minister on our GPA membership in the event of no deal, which is absolutely essential if we are to protect the access of UK suppliers across the EU. Although, as the Minister mentioned earlier, we have an agreement in principle, will he assure us that we will definitely be ready for independent GPA membership on exit day?

If the UK leaves the EU without GPA membership, the explanatory memorandum states in paragraph 7.20 that Government policy will be to offer other nations access into our procurement market, seemingly without any assurances that this arrangement would be reciprocated. We could then be in the incredible situation of allowing international suppliers competing with UK firms to fulfil our procurement contracts while UK firms might be prevented from accessing global procurement markets. This policy would be disastrous for UK firms and emphasises the totally chaotic handling of these negotiations. It further adds to the uncertainty that businesses are already facing with Brexit.

Let me reiterate that if our GPA membership is not finalised before exit day, this is yet another area in which we are simply not ready for exiting the European Union next month without a deal. Six pieces of legislation are not in place that would need to be. The Government are seriously behind on the passage of statutory instruments such as this, which are needed if we are to leave without a deal or a transition period. Equally, our Border Force is woefully unprepared, without the staff or IT systems needed for EU exit. We can add GPA membership to the growing list of reasons that we are simply unable to leave next month without serious chaos and disruption.

Finally, I have two quick points of clarification. With reference to the transitional measures set out in the schedule, specifically in paragraph 2, what assurances have we received from the EU that existing contracts with UK suppliers will be honoured? Will the Minister clarify the mechanism that the Government will use to cancel or nullify this SI in the event that the UK does leave the EU with a deal? Will he also confirm that a further SI will then be needed during the transition period to prepare the statute book for our future negotiated relationship?

In closing, I want to reflect on and state our disbelief that there are no impact assessments accompanying this SI. I dedicated my speech to pointing out the enormous changes these regulations will cause to the UK procurement system, from a new IT system to the possibility of UK SMEs being restricted from applying for EU procurement contracts.

Impact assessments should quite clearly have been carried out, especially when the stability of some of our SMEs is at stake. However, the explanatory note states that

“no, or no significant, impact”

on the private or voluntary sector is foreseen. It even goes on to say that the impact on small business is expected to be low. How is that defensible after all that we have heard? It is a disservice to those businesses that assessments have not been completed but, quite frankly, I should not be surprised, as it is characteristic of this Government’s handling of this entire process: “Trust us and we’ll sort it out.”

I take this opportunity to restate our position that no deal must be categorically ruled out by the Government. As these regulations confirm, we are not ready for the chaos it would cause. These regulations, most of all, risk baking in the imbalances our SMEs too often face in the system, and they confirm our belief that the procurement system needs urgent transformation, to put real social value at its heart. If only we had a Government willing to stand up in the interests of the many, and to reform the broken system that, too often, works just for the few.